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Property: Fixed Charge Receivers

Adam Swirsky discusses how one form of enforcement still available during the Covid-19 Pandemic is the appointment of a fixed charge receiver and what the receiver’s duties are in regard to the case of Centenary Homes -v- Liddell [2020] EWHC 1080.

Many forms of enforcement were put on hold during the early months of the Covid-19 pandemic but one method that has continued to be available is the appointment of a fixed charge receiver. There have been some restrictions on what a receiver can do and, in particular, a receiver has not been able to take possession against tenants (conversely, where the receiver is in possession, a landlord cannot recover possession from the receiver). A receivers may, however, sell a property although, without first obtaining possession, this might pose a challenge in some circumstances.

The recent decision in Centenary Homes v Liddell [2020] EWHC 1080 has served as a reminder of a receiver’s duties. In that case the receivers repossessed a number of properties and sold them. The properties were sold in trances until the receivers were left with a debt of £485,000 and two properties valued at £400 – £500,000 each. Both properties were sold and both sold for more than their guide price leaving the receiver with a substantial surplus. The borrower was unhappy and, among many complaints, argued that some properties were sold at an undervalue (because the receivers didn’t rectify defects and obtain planning permission before sale) and at least one sale was unnecessary. The borrower contended that selling a property when it was unnecessary was outside of the receivers’ powers, a breach of their duty of good faith and a breach of their obligation to avoid preventable loss.

The court found against the borrower on all but one issue but importantly, reminded us about the receivers’ duties and obligations:

  • The receivers’ primary duty is a duty is to manage the security for the benefit of the mortgagee.
  • The receivers had a secondary duty to the mortgagor to avoid preventable loss.
  • Where the receivers decide to exercise their power of sale they will generally owe a duty to the mortgagor to take reasonable care to obtain the best price reasonably obtainable at the time of sale. They will only be negligent if they acted as no competent receiver acting with ordinary care and competent advice would have done and enjoy a degree of latitude, not only as to timing but also to the method of sale employed.


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